Algeria invites Gazprom, Lukoil to jointly develop oil and gas

Algeria, with Africa’s second biggest gas reserves, has asked Russia’s Gazprom and Lukoil to tender for the joint development and exploration of some of the 30 fields that make up a fifth of the country, says Gazprom International.

Both Russian oil and gas majors signed an agreement to cooperate
with Algerian state-owned Sonatrach in August 2006, but so far no
joint projects have been agreed, Vedomosti newspaper said.

Sonatrach is the largest Algerian and African company and the
11th largest oil consortium in the world. It has a huge potential
in terms of oil and gas reserves, a representative from Gazprom
International told the newspaper.

Valery Nesterov from Sberbank CIB says the discovered reserves
have remained unchanged for the past decade, while domestic
consumption is growing. This has eaten into Algerian exports to
the rest of the world, with supplies to Europe falling 18.5
percent in 2013 to 37.9 billion cubic metres.

So, to meet its export obligations, Algeria needs investment in
exploration and an increase in its resource base and extraction,
Aleksey Grivach, deputy director at Russia’s National Energy
Security Fund explained. Sonatrach currently holds a monopoly in
gas exports, so Gazprom may just bid for some service contracts,
he added.

Algeria needs bigger extraction volumes not just to increase its
exports to Europe but also to have more supplies of liquefied
natural gas (LNG) available for Asia, which could become a point
of cooperation with Gazprom, Grivach said.

Also, cooperation with Algeria’s Sonatrach would give Gazprom
information about Algeria’s resource base and the potential for
export growth, he added. On top of that, it’s important for
Gazprom to keep an eye on Sonatrach, its main African rival,
Nesterov said.